DEED Launches Second Small Business Funding Stream

St. Paul – Today, the Minnesota Department of Employment and Economic Development (DEED) launched the Growth Loan Fund as part of the recently announced $97 million through the State Small Business Credit Initiative (SSBCI) from the U.S. Department of the Treasury. This new program provides direct loans from DEED to technologically innovative seed- and early-stage businesses.

“New technology startups are central to Minnesota's overall competitiveness, and this funding will help more Minnesotans build the next big thing," said DEED Commissioner Steve Grove. "The funding will have a significant impact for startups around the state who need it most – especially entrepreneurs of color, women and veterans who are building the future of our economy.”

The federal government has approved Minnesota for up to $97 million in small business financing support, which allows DEED to carry out its commitment to help small businesses grow and succeed. The Growth Loan Fund supports entrepreneurial growth throughout Minnesota.

Businesses seeking funding through this program need to be engaged in, or be committed to engage in, technological innovation in Minnesota. Qualified high-technology fields include: aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical devices, pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science, or similar. The primary business activity must include one or more of the following:

• Using proprietary technology to add value to a product, process or service in a qualified high-technology field

• Researching or developing a proprietary product, process, or service in a qualified high-technology field

• Researching, developing, or producing a new proprietary technology for use in the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation

• Researching or developing a proprietary product, process or service in the fields of agriculture, tourism, forestry, mining, manufacturing, or transportation (no technology component required)

Informational webinar

Businesses interested in participating in the Growth Loan Fund Program are invited to join a webinar with DEED officials on Friday, November 4 at 1:00 p.m.

Applicants must be seeking equity investments in a funding round that includes at least one venture capital fund or accredited investor. Loans range from $100,000 to $400,000 based on 20% of the total investment in the defined funding round, not to exceed 12 months subsequent to loan approval. The business must complete at least 70% of the proposed equity raise to remain eligible for the loan.

DEED is now accepting applications from businesses seeking financing from the program.

Eligible businesses must meet one of the following criteria: 1) been certified to participate in the Angel Tax Credit (ATC) Program; 2) be identified by a venture or angel fund for investment; or 3) be identified by an individual accredited investor for investment. Launch Minnesota grantees are strong candidates for this funding.

Loan Guarantee Launched

In October, DEED opened the Loan Guarantee program for banks and Community Development Financial Institutions (CDFI) to apply to be enrolled lenders. DEED has allocated $12.5 million for the program with $4 million available in the first disbursement. Interested banks and CDFI’s may apply here. DEED will post enrolled lenders on the website.

More SSBCI programs coming throughout the fall

The other small business funding streams launching in the weeks ahead include automation loans and purchased loan participations. Additionally, a partnership with the University of Minnesota will provide opportunities for direct investment venture capital and venture capital fund investments.

Bringing it all together: a new online Small Business Hub

To help small businesses and startups navigate these new programs and understand the breadth of DEED’s existing resources for small businesses, the agency recently launched a new online Small Business Hub. The Hub is designed to help entrepreneurs navigate agency resources to start and grow their businesses. It provides resources and expertise for small business owners looking to launch in Minnesota, along with a comprehensive list of DEED program offerings to help entrepreneurs thrive.

It can be found at joinusmn.com/smallbusiness.

The creation of one-stop shop resources was one of the recommendations of the Governor’s Council on Economic Expansion, which advocated for increased focus from the agency to help small business growth. That recommendation will remain a key priority of the Walz-Flanagan administration across the enterprise.

For more information about SSBCI, visit Treasury’s SSCBI page or learn more at DEED.

About the State Small Business Credit Initiative

SSBCI was part of the American Rescue Plan Act (ARPA) of 2021 and included $10 billion for state, territory and tribal business finance programs. This is the second SSBCI initiative – Minnesota received $15 million through the Small Business Jobs Act of 2010.

DEED is the state’s principal economic development agency, promoting business recruitment, expansion and retention, workforce development, international trade and community development. For more details about the agency and its services, visit the DEED website, the JoinUsMn.com website, or follow us on Twitter.